Frannie & Freddie at it again. One of the biggest bailouts of all time.

Nomi Prins: How Many Regulators

Does It Take to Screw Investors Out of $1.2B?

Three-plus years since the subprime mortgage crisis — aided and abetted by Fannie Mae and Freddie Mac — triggered the collapse of Lehman and bailouts of the big banks and AIG, scant little progress has been made to safeguard the markets, investors or the economy.

To add insult to injury, the big banks are bigger and more profitable than ever, but still not a single person has been held accountable for causing the worst recession since the Great Depression.

The most recent fallout from lack of regulatory oversight of the banking and investing industry is the collapse of MF Global, run by former Goldman Sachs CEO Jon Corzine. A stunning $1.2 billion in client funds are still missing more than month after the company buckled on fears of its leveraged bets on European debt. (See:It’s the Leverage, Stupid: Jon Corzine’s MF Global Goes Bust)

The problem is banks and brokers “have too many different competing businesses that are mixed with customer funds… and [there’s] so many different regulators whooshing about not being responsive, not being accountable, not talking to each other,” says Prins, a former managing director at Goldman Sachs and currently a senior fellow at Demos.

Take MF Global (please!): “You had MF Global U.K., which was responsible to the financial services authority in the U.K. You had MF Global Inc., which was [responsible] to the CME, the CBOE,” she notes. “[And] you had it listed as a broker-dealer, which meant it was also supposed to be overseen by the SEC.”

Corzine testified under oath four times this month to four different Congressional panels and denied any wrongdoing or knowledge of what happened to his customers’ missing $1.2 billion. “While the last few days of MF Global were chaotic, I did not instruct anyone to lend customer funds to MF Global for any of its affiliates, nor was I told that anyone had done so,” he said.

“How many inept regulatory bodies does it take to screw customers out of $1.2 billion?” Prins asks in a recent blog post. She believes Corzine is trying to dodge accountability and responsibility — in the grand tradition of so many financial executives that came before him.

“I believe that Corzine knew exactly where those funds went and why they were needed,” she tells The Daily Ticker’s Aaron Task in the accompanying interview. “In the twelfth hour of the firm’s collapse there is no way as a person who knows these markets…who knows where money goes…who knows how it works had no clue what was going on.”

The way things are going for Corzine and the case of MF Global, it looks like he too may skirt free with no criminal charges levied against him.

Watching the Watchdogs

Such disregard for the pain and suffering caused over the last few years has many wondering: Where are the regulators? Where are the perp walks?

Well, the Securities and Exchange Commission, the regulatory body in charge of overseeing the securities industry and markets, has been busy — but only in allowing banks to settle charges of wrongdoing with nothing more than a slap on the wrist. By neither admitting nor denying wrongdoing, the SEC has allowed banks from JPMorgan to Citigroup “get off” on a wide range of issues with just financial penalties and settlements. (See:Taken to Task: Jamie Dimon’s House of Ill Repute)

Enough was finally enough for New York District Court Judge Jed Rakoff. Frustrated with inadequate punishment for financial malfeasance, he last month rejected the $285 million settlement between Citigroup and SEC, saying the deal was “neither reasonable, nor fair, nor adequate, nor in the public interest.” (See:Taken To Task: Capt. Cronyism, Hank Paulson)

It must be noted, however, that the SEC on Friday did bring the first big civil charges against six former executives of Fannie Mae and Freddie Mac.

But according to Prins, more civil charges are just par for the course and Americans can only expect more of the same until regulators start doing a better job, stop “punting” on the penalties for unlawful behavior and make way for some real financial reform.

Until that time, don’t be surprised when, not if, another MF Global hits.